A rise in Iranian oil supplies is what the global oil market needs now, as worsening energy security and market volatility will be a lose-lose game for all the sides involved, the oil minister said on Thursday.
Javad Owji, who was speaking after the 30th OPEC and Non-OPEC Ministerial Meeting, also known as the OPEC+ coalition, held via videoconference on Thursday, added that OPEC+ has decided to uphold its decision agreed last month to add 648,000 barrels to its daily crude oil production for June and August, the Oil Ministry’s news agency Shana reported him as saying.
The decision was made after some OPEC+ producers failed to reach the agreed quota and their oil production declined. The inventories of crude oil and oil products in some major consumer countries have been decreasing. As a result, OPEC and its allies agreed to raise their collective crude oil output in the meeting.
“As a country that holds large oil and gas reserves in the world, Iran is ready to increase crude oil output as soon as possible,” to help stabilize the market.
The statement was made after it was reported last week that Saudi Arabia and the UAE, two top OPEC oil producers, can barely increase oil production.
Owji said recent developments in the world economy show the rising impact of inflation on many countries and a remarkable rise in fuel prices.
“As I have frequently said in recent months, under the current global oil market condition, the return of Iran oil can help meet a part of customers’ needs and balance the world markets. We will witness an increase in global oil and oil products demand, as summer travels are to start in Europe and the United States. Therefore, consumer countries are likely to face additional price pressures, especially from oil products market,” he said.
Avoiding Deepening Financial Crisis
In related news, the former director of international affairs of the National Iranian Oil Company said the return of Iran’s crude oil to the market could prevent the further deepening of the global economic crisis.
“The demand for crude oil in the European Union has declined due to tensions between Russia and Ukraine and in China, due to the prolonged coronavirus pandemic,” Hojjatollah Ghanimifard said.
Ghanimifard, who is also the former adviser to the secretary-general of OPEC, noted that if crude oil imports from one country decreases, oil imports from another country or other countries with similar crude oil conditions will increase.
“Iranian oil can start flowing after the lifting of sanctions due to the existing demand in the oil market. Delays in a country's production and exports can push oil prices higher than they are now, so more supply can help calm oil prices and prevent a recession in the global economy due to rising prices,” he said.
“The return of Iranian oil to the market will reduce prices and prevent a decline in demand, and eliminate the global recession that many predict will occur later this year or early next year.”
Exports on the Rise
According to the Oil Ministry, Iran exported more than 1 million barrels of oil per day in the first two months of the current Iranian year (March 21-May 21), which is 40% higher than what Iran sold in the same period of last year.
The country has succeeded in keeping the sale of oil steady while it is under tough sanctions imposed by the US. With the efforts of all industry players, oil production has not been halted even for a day in the past four years when the country was hit by a new round of sanctions.
The rise in oil sales compared to previous months, along with the crude price hike in international markets, has helped raise the country’s foreign revenues in the oil sector.
According to reports, oil revenues in the first two months of the year had a 60% increase compared with the same period of last year.
The Central Bank of Iran declared that more than $7.5 billion of oil and petrochemical sales were received in the first two months, indicating a $3 billion hike compared with the income earned during March 21-May 21, 2021.
The ministry plans to raise the production capacity of crude and condensates to 5.7 million bpd in the near future from about 4 million bpd now.
The focus will be on developing West Karun block, home to a cluster of oilfields that Iran shares with Iraq, to raise its production from 420,000 bpd to 1 million bpd.
Straddling the border with Iraq, West Karun comprises several large oilfields, namely Azadegan, Yaran, Yadavaran, Darkhovein, Naftshahr, Paidar-e Gharb and Azar, with the first three divided into north and south projects. The block holds an estimated 67 billion barrels of oil in place.
Despite decades of sanctions and limited investment, Iran remains one of the 10 largest oil producers in the world, ranking eighth after the US, Saudi Arabia, Russia, Canada, Iraq, China and the UAE.
The country sits on the world’s fourth-largest proven oil reserves after Venezuela, Saudi Arabia and Canada. Holding 17% of global gas reserves, it ranks second after Russia.
Iran is the third-largest gas producer after the US and Russia, accounting for 6.5% of the global gas production, though most of it is consumed locally.
